Light Reading

AT&T Tests Drivers' Desire to Pay for LTE

Sarah Thomas
3/12/2014
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Wireless operators are turning cars into big mobile hotspots, but the question they are now grappling with is: Are their customers willing to pay for them as if they were mobile hotspots?

AT&T Inc. (NYSE: T), for one, is counting on it. The carrier is lending its 4G LTE network to Audi's new A3 sedans and is offering customers two ways to pay: a six-month plan for $99 and 5 GBytes of data or a 30-month plan for $499 and 30 GB of data, both after a six-month free trial. Come this summer, AT&T customers will be able to add their cars as another "device" on their Mobile Share data plans and keep tabs on how much data they've consumed each month. (See Audi Taps AT&T for In-Car LTE, AT&T Ups the Stakes in Connected Cars, and AT&T Beefs Up Connected Car Efforts .)

The data plan will give drivers access to Audi Connect services, including navigation, music streaming, and the wide world of the Internet from their dashboards. Audi has offered 3G connectivity on a monthly basis in the past and says it found that drivers preferred to pay in six-month or 2.5-year plans. (See Euronews: Vodafone Connects With Audi, VW.)

Whether or not customers will cough up for the service at all is up for debate, however. New research from Heavy Reading suggests that consumers are reluctant to pay for many connected car services and are even averse to others, for personal privacy reasons. But Danny Dicks, Heavy Reading analyst and author of the report, "Telecom Opportunities in Transportation Telematics & ITS," believes Audi drivers may be more likely to pay for connectivity based on how AT&T has structured the billing. (See Finding the Value in Transportation Telematics.)

"I think AT&T’s shared data plan idea is a good one. Adding the car connectivity won’t seem like adding a whole new subscription -- just adding another 'family member,' which probably looks like a better value to most drivers," Dicks tells Light Reading.

In general, however, Dicks believes that both connectivity and incremental services might be hard to sell a smartphone owner who has free apps or existing paid-for apps that can do something close to what’s being offered on the telematics platform: "The connected car idea needs to demonstrate real utility that can’t be replicated over existing devices and connections."

Audi and AT&T's service is similar to one Volvo has been offering with Ericsson AB (Nasdaq: ERIC) for the past few years, Volvo OnCall, which it rebranded at CES to Sensus Connect. The service comes with connectivity free for 12 months with a new Volvo, followed by a subscription, and includes infotainment features such as music streaming and restaurant location, roadside assistance, safety features, and -- a popular one in Sweden -- the ability to remotely heat the car before getting in.

Dicks says that Ericsson has had to find the services that work for Volvo, which happen to primarily be mashup style infotainment apps, but that operators might find luck looking into other opportunities for monetizing connected cars that have nothing to do with the driver or passenger.

For example, he suggests revamping traffic system modeling, which depends on accurate information about vehicle movements. It's currently an expensive and time-consuming process to collect this data via roadside surveys or automatic license plate recognition technology that ends up not always being accurate.

"But connected vehicles can generate just the sort of data the transport modelers at highway agencies and local government authorities need -- so there should be a business model there," he says. And, if operators own the SIM on which the data is collected, this could be a good opportunity for them, too.

It's still early days out on the connected road, but it's the area of machine-to-machine communications that is attracting the most interest from operators, and the opportunity will become more significant when the ROI issues are worked out. AT&T's subscription service with Audi will be a good test of consumers' willingness to pay in the US.

— Sarah Reedy, Senior Editor, Light Reading

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Susan Fourtané
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Susan Fourtané,
User Rank: Blogger
3/17/2014 | 4:46:39 AM
Re: Would you pay?
Sarah, 

I believe you could get a remote heating system for your car in Chicago.

-Susan
Susan Fourtané
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Susan Fourtané,
User Rank: Blogger
3/17/2014 | 3:34:49 AM
Re: Would you pay?
Sarah, 

Sure. Most of these features and some others that most likely will follow are going to built in the new models in a not distant future. Most of these things are going to become common and not expensive for the manufacturers. It's just a matter of time. 

-Susan
David Dines
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David Dines,
User Rank: Blogger
3/14/2014 | 4:14:53 PM
Re: Would you pay?
Great discussion.  I personally would not pay a lot extra for this.  I have my smartphone already.  I would like to have seamless integration with that for navigation and POIs. If my passengers want to watch video on their smartphone, let them use their own allotment.

As for the telematics info, I would not want to pay a lot extra for that either because it should be included in the vehicle, the actual data traffic required should be so small that the manufacturer should be willing to pay for it, they get valuable data that should more thatn offset the cost.

 
SarahReedy
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SarahReedy,
User Rank: Blogger
3/14/2014 | 2:33:11 PM
Re: Yet another monthly/semi annual fee ?
You're not the only one (see the discussion thread!). For a car, 6 months is certainly more appealing than monthly though, and at least it's on the same bill as other mobile services, but still. It's asking a lot.
derac7020
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derac7020,
User Rank: Lightning
3/14/2014 | 10:46:01 AM
Yet another monthly/semi annual fee ?
Maybe I'm just the grinch here but is anyone else growing weary of these monthly fees ?  Amazon, Netflix, Hulu, Spotify, Sirius just to name a few.  Do I really want a phone bill for my car ?
SarahReedy
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SarahReedy,
User Rank: Blogger
3/14/2014 | 9:46:21 AM
Re: Would you pay?
But most of those features are value-adds because you bought a high-end car. They don't have subscriptions. I think we'll see more of these costs being built in, if the subscription model doesn't pan out.
mendyk
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mendyk,
User Rank: Light Sabre
3/14/2014 | 8:53:40 AM
Re: Would you pay?
Do you know of any truly "cool" people who have bought their way into that club?
Susan Fourtané
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Susan Fourtané,
User Rank: Blogger
3/14/2014 | 8:25:10 AM
Re: Would you pay?
Sarah, 

The cool factor has been important since cool exists. :) 

Paying by app is convenient for those who don't want, or need too many extras.

-Susan
Susan Fourtané
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Susan Fourtané,
User Rank: Blogger
3/14/2014 | 8:14:56 AM
Re: Would you pay?
Mitch, 

Yes, there are remote systems available to start and stop the heating of your car, lock and lock the doors, and start the engine. 

I hope you were not in a hurry when you rented that car in Santa Clara. They should have told you how to start the car, or ask if you knew the system at least.

-Susan 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
3/13/2014 | 6:24:33 PM
Re: Would you pay?

Aren't there already options to enable you to start your car and start heating your car remotely?

Another question that needs to be considered is why a person would pay for a data plan when they already have a phone in their pocket.

I rented a car in Santa Clara last week with some kind of keyless ignition system. Avis just handed me a key ring with a couple of fobs on it, but no key. It took me 20 minutes to figure out how to start the car! The advantage, I suppose, is that you could theoretically start and operate your car with your keys in your pocket or purse. But that doesn't work in practice, because you have to take the fob out of your pocket to unlock the car door.

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